RAM Ratings has reaffirmed the AA1(s)/Stable rating of Sarawak Power Generation Sdn Bhd’s (SPG or the Company) RM215 million Serial Sukuk Musharakah (2006/2021).
The enhanced rating reflects support for SPG from Sarawak Energy Berhad (SEB or the Group), which owns the Company via 100%-held SEB Power Sdn Bhd. SPG holds the licence to build, own and operate a 317 MW combined-cycle, gas turbine power plant (the Plant) in Tanjung Kidurong, Bintulu, Sarawak.
SEB has provided various forms of assistance to SPG through the last decade. Backing this is a letter of support from Syarikat SESCO Bhdd – a wholly owned subsidiary of SEB and SPG’s sole off-taker – in which SESCO undertakes to ensure that SPG fully and promptly meets all its financial obligations in respect of the Sukuk throughout the tenure of the facility.
Under the terms of its power purchase agreement with SESCO, SPG earns full capacity payments as long as Units 7 and 8 of the Plant maintain a dependable capacity of 105 MW and a minimum rolling monthly Equivalent Availability Factor of 85%, regardless of the amount of electricity sold. As a provider of essential services, SPG continued to operate throughout lockdown periods amid the pandemic.
However, shorter operating hours and delays from movement curbs extended major inspections of the Plant, which resulted in higher capacity losses and lower energy payments. This led to significantly weaker earnings.
As at end-June 2021, SPG’s cash balances of RM27.34 mil – including reserves in the fully funded Sukuk Distribution Account – more than sufficiently cover its final obligations of RM10.41 mil due in December 2021.
